Like all companies, utilities need dependable contractors and vendors. But utilities have additional supplier requirements unique to their businesses—from national safety standards to an understanding of the regulatory world. And they are strongly motivated to spend their contracting dollars close to home, in the communities where their customers and employees live.
So, when the major utilities in Illinois wanted to formalize their outreach to new and diverse business partners, they decided on a utility-only approach. The Illinois Utilities Business Diversity Council was born.
The seed that grew into the IUBDC was sown by the Illinois Commerce Commission, the state’s utility regulators. Tucker Kennedy, director of communications and public relations for Ameren and chair of the council’s communications committee, said it was the commission that initially “suggested there could be great public benefit if the utilities joined forces to expand minority participation in the supply chain … . Our founding board directors took it to the next level.”
He added, “Our companies share the understanding that diversity truly is important. It’s not just a box to check off. Clearly, there are inherent economic and business advantages to growing the base of available contractors.”
In other words, the broader the contractor pool, the more readily utilities can find the skills they need, when they need them, at competitive pricing. But additionally, “from a community-building standpoint, it’s important that the people who are doing the work reflect, mirror and embody our respective customer bases,” said Kennedy.
Torrence Hinton is president of Peoples Gas and North Shore Gas, serving the city of Chicago and its northern suburbs. He said, “You can’t have a successful city or region or state—or even a company—without its major stakeholders having the opportunity for success. From an economic opportunity perspective, the council’s work is hugely important for the communities we serve. … So, for Peoples Gas and North Shore Gas, being a part of the IUBDC makes a lot of sense—and certainly has enhanced our efforts.”
Illinois is one of a few states to mandate reporting of supplier diversity spending and goals by their regulated utilities. In 2022, several participating utilities reported that close to 50% of their contractors fell into the target categories. And collectively, the utilities spent $2.2 billion—40% of their contracting budgets—with these businesses.
All told, between 2015 and the end of 2022, the IUBDC grew spending with minority-, women- and veteran-owned businesses from 15% to 33% of its total supplier base.
Wendell Dallas, president and CEO of Nicor Gas, is also a member of the IUBDC. “The IUBDC is contributing to this growth by fostering collaboration among utilities to help diverse suppliers navigate the bidding process, win contracts and achieve scale,” he said.
Five major public utilities came together to start the IUBDC in 2015, and a sixth has since joined. The utilities’ top executives serve as the decision-making board, ensuring continued pursuit of the vision and achievement of measurable goals.
Except for a part-time executive director, the council has no staff of its own. Content experts from each of the utilities—from procurement and operations to public affairs and human resources—form committees to share best practices and outreach ideas.
Kennedy said, “Each company has its proprietary approach to procuring goods and services, but we also benefit from collaboration.”
This cooperation is particularly useful given the wide range of geography and demographics covered by the various utilities. For example, Ameren, which serves cities and rural areas as far south as the Kentucky border, benefits from dependable references from council members with shared expectations for quality and responsiveness. “We cover 45,000 square miles—about 75% of the state of Illinois,” said Leonard Singh, chair and president of Ameren Illinois and IUBDC chair. “We have the benefit of Metro East, which is close to St. Louis, and midsized cities like Peoria and Champaign.” But depending on the nature of the work, he said, it can be challenging to find local diverse suppliers. So, referrals from other parts of the state are helpful.
Hinton added, “We are here to be a resource for other utilities, and we certainly learn from them as well.”
As a council, “We create mechanisms to locate smart and experienced contractors,” Hinton said. “That enables us to create an enhanced, developed pool with a statewide—not just a regional—focus. And that allows us to be more effective with our operational metrics and initiatives within our company.”
The council takes a two-pronged approach: connecting utility experts with prospective vendors while supporting supplier businesses through utility-specific education and development opportunities.
Networking is fundamental to the council’s activities. The IUBDC invites suppliers to receptions and conferences where they can meet each other and utility decision-makers. To further expand its contacts, the council partners with the Illinois Minority Supplier Diversity Council as well as organizations supporting Hispanic-, Black- and women-owned businesses. An example of its educational approach was a recent webinar the IUBDC hosted for new vendors: “How to Do Business with Utilities.”
Kennedy said one IUBDC goal is to help businesses expand their own customer bases by strengthening access to and understanding of broader economic opportunities.
Among its efforts, the council has hosted programs to introduce major suppliers of automotive, construction and agricultural equipment to vendors with whom council members have established relationships.
Kennedy said the message to suppliers is, “Use the resources and the acumen you’re gaining from your utility work to diversify your own markets. A company that can work in other supply chains is a stronger, well-rounded utility supplier.”
A centerpiece of the council’s efforts is its scholarship program, which sends high-potential diverse business owners to a training program at the prestigious Kellogg School of Management at Northwestern University.
For scholarship recipient Stephen Brock, president and CEO of Supplied Industrial Solutions, the program gave him “the opportunity to think bigger and look at the broad spectrum of opportunities across the utility industry.”
“It was truly a transformational experience,” added Stephen Vaughan, president and CEO of CERA Solutions, which is working on a major natural gas pipeline rebuild.
Byron Witherspoon is Ameren’s director of supplier diversity and supply chain reliability. A leader in the council’s formation, he has seen how small steps, as well as broad strokes, can make a difference to a supplier’s prospects.
Witherspoon and his colleagues are working to make sure businesses have access to information they need to keep up with changing circumstances. For example, the council recently held a workshop on cybersecurity. There is no compromising on cybersecurity when doing business with utilities. But, said Witherspoon, what the council can do is help smaller suppliers in particular identify affordable solutions that will meet utility requirements.
Similarly, his procurement team is examining Ameren’s boilerplate insurance requirements. “Are the standard requirements necessary in all cases? Are they unduly burdensome? In some instances, these requirements just aren’t necessary,” Witherspoon said. “Should a custodial service need the same level of liability coverage as an excavator? If not, why not modify the requirements to fit the scope of the work?”
Utilities want to help local suppliers plan for growth, whether it’s publishing their buying plans for the next 12 months or keeping businesses abreast of new approaches to combating climate change. Witherspoon encourages supplier leaders to ask themselves, “Are we ready today? If we are not there yet, how can we get there?”
The nation’s focus on reducing greenhouse gases continues to demand tremendous changes in technology, knowledge and supporting services. These changes represent a giant opportunity for new and growing suppliers.
“I am a firm believer that natural gas has a place in the clean energy transition—from heat pumps and energy efficiency to renewable natural gas and hydrogen blending,” Ameren Illinois’ Singh said. “Gas pipelines have proximity to the customer and can do a lot from an energy security and a resiliency perspective.
“At the same time, the entire state, the entire country, the entire world is transitioning to cleaner energy. So, competition for qualified resources that understand how to implement new technologies is increasing, and that calls for new skill sets,” Singh added.
The executives mention the potential for hydrogen blends and RNG as important new energy sources emerging from the natural gas industry. They say the IUBDC has a major role to play in ensuring that the existing vendor community and related businesses are prepared for these new technologies.
Suppliers also have a key role as utilities continue to lean on tried-and-true methods to reduce greenhouse gases—by rebuilding their systems. Peoples Gas is a good example. “We are looking to modernize a system that spans across the city,” said Hinton. “We’re doing this from a safety perspective and a reliability perspective as well as an environmental sustainability perspective. The work is complicated, and the scale is large—replacing more than 2,000 miles of pipe across every neighborhood within the city of Chicago.
“So, we are looking for talented engineers, technology experts, pipefitters, welders, as well as other support services such as financial and legal experts, to assist in this effort,” he said.
Regulatory, technical and legal complexities are leading to this greater demand for specialists in everything from accounting and finance to law and information technology. To expand the available resource pool, the IUBDC’s focus for 2023 is on building more relationships with minority-, women- and veteran-owned professional services providers.
“We are forging new local partnerships like the one we have with First Women’s Bank—the only women-founded, womenowned and women-led commercial bank in the country,” said Nicor Gas’ Dallas. “It’s headquartered right here in Illinois. This diverse business bank can help eliminate barriers to entry for more local diverse businesses by assisting with access to capital. … Partnerships like this drive innovation within the supplier value chain and strengthen the pipeline of diverse suppliers for the future.”
In short, supplier diversity leads to innovation, quality and overall competitive value. “And when utilities work together to serve the state, it makes all of us better and stronger for our customers,” said Dallas. “We’ve made an intentional effort to open doors for diverse businesses across all areas of our businesses with education and mentorship opportunities, and we continue to see the positive social and economic impact our work has on the lives of families in the communities we serve.”
Singh, as current council chair, summarized the IUBDC’s work in coming decades: “The energy industry is evolving rapidly, and utilities are going to be spending and investing a tremendous amount of money in their systems,” he said. “So, we need to continue to focus on making sure there is an equitable transition for the customers and the communities we serve—and that no one gets left behind in the process.
“That means developing more workforces within our community footprint and making sure the programs and projects we implement contribute to all segments of the population from an equity perspective.”
In the words of Nicor Gas’ Dallas, “We’re bigger than our bottom lines.”
2023 IUBDC Board of Directors
Ameren Illinois, Leonard Singh, IUBDC chair
Aqua America Illinois, David Carter
Commonwealth Edison, Gil Quiniones
Illinois American Water, Rebecca Losli
Nicor Gas, Wendell Dallas
Peoples Gas and North Shore Gas, Torrence Hinton